Contents

FOREWORD

In recent years, with the growing interest in
population problems around the world, there has been much discussion
of population control. Many writers have argued that individual
fertility decisions do not add up to what is socially optimal or even
acceptable, and hence that such decisions cannot be left to the
individual actors.

Such discussion has raised profound questions on
the proper relationship between individual behavior and the common
good. To balance the discussion with a statement from the libertarian
point of view, this paper was commissioned as a responsible
contribution to the current inquiry.

The essay is not an official statement on behalf
of the Population Council. The author is solely responsible for the
point of view expressed herein.

Bernard
Berelson,

President

The Population Council

INTRODUCTION

This essay analyzes United States population
problems, focusing on the consequences of individual freedom of
choice. The general argument for freedom of choice depends on
individuals bearing the costs, and receiving the benefits, of their
own actions. It is widely believed that this condition does not and
cannot hold in matters of population, that parents, in deciding to
have children, impose a large part of the cost of that decision on
people other than themselves and their children, and must do so under
any tolerable social institutions, and that parents are therefore
likely to have "too many" children.

I investigate that thesis in Chapters 1-6 and
conclude that it is false. Under present institutions, most of the
cost of most children is borne by themselves and their families; the
part of the cost transferred to others is insufficient to alter the
population substantially. Furthermore, the amount of the cost so
transferred could be reduced by institutional changes that I suggest.
I conclude that parental freedom of choice is the best available way
of determining population.

In Chapter 7 I discuss the likely effects of the
continuation of current United States population trends, to discover
whether those trends are an experimental disproof of the conclusion
of Chapter 6.

Two preliminary points should be mentioned. The
first concerns the concept of value. The values discussed in this
essay are all values to human beings. I will be concerned not at all
with the question of whether virgin forests, endangered species, or
the survival of the human race has some absolute value above and
beyond value to specific persons.

Only human values affect human action. Since I am
interested in comparing the results of different population policies
with each other, not with some divine ideal, and since all of the
alternative policies depend on the decisions, and hence the values,
of humans (whether politicians or parents) for their implementation,
I can ignore any value that is not of value to someone; no policy
will achieve it, except by accident. If there exist ends that matter
not at all to persons but are of transcendental importance in the
eyes of God, God will have to take care of them Himself, This essay
is addressed to more mundane readers.

I will measure values according to the principle
of consumer sovereignty: The value of something to someone is what he
is willing to pay for it--what other values, monetary or otherwise,
he is willing to give up in exchange. Thus human values are measured
by actions, not words.

A common objection to this procedure is that it
limits itself to "economic values," and excludes more subtle cultural
or spiritual values. This is false. The value of a Beethoven
symphony, insofar as it is reflected in the actions of individuals
who wish to hear that symphony and are willing to give up other
things they value to do so, is as much an economic value as the value
of a ham sandwich. So is the value to a parent of having a child to
love, as shown by the large costs parents are willing to bear to
obtain that value.

One kind of value that is difficult to deal with
in this way is the value of particular political institutions. Since
everyone in the country is under the same government, citizens are
not easily able to buy the political institutions of their choice.
There is therefore no easy way of measuring the value to the citizens
of those institutions That value may be relevant to the issue of
population. It is sometimes argued that a large population makes
democratic institutions more difficult, and a dense population
increases perils to civic order. It can also be argued, in the other
direction, that the social steins produced by any government attempt
to control population would be a greater threat to our political
institutions than any likely growth in population. There are so many
factors involved in the workings of political institutions, and they
are so poorly understood, that any such prediction is little more
than a guess. These questions will not be dealt with in this
essay.

The second point concerns the attitude I take in
this essay toward government. Most writers on population make no
distinction between "The correct thing should be done by the
government," and, "The government should decide what is correct and
do it." They see government as a means for imposing their conclusions
about what should be done on the society as a whole. At the worst,
they fear that the government may be slow to assume new
responsibilities or overly timid in applying its powers. The
possibility that it might make the wrong decision and act in the
wrong direction is rarely discussed.

Consider, for instance, Kingsley Davis's article
(1) "Population Policy: Will Current Programs Succeed??' His central
argument is that current population policy is directed toward giving
parents control over the number of children they have. He attacks the
supporters of such policy for implicitly assuming that if parents can
decide how many children they can have, the "proper" population will
result. He argues that this assumption is false and concludes "that
current programs will not enable a government to control population
size." But it never occurs to him to discuss his implicit
assumption--that if a government can control population size, the
result will be the "optimum" population in terms of the welfare of
its individual members. That assumption I reject. I shall treat
governments, not as agents of divine wisdom, but as human
organizations, and will attempt to predict their future performance
on the basis, not of hopes, but of past performance.

I will sometimes speak as though the only two
alternatives were parents controlling the number of their children,
and government controlling it for them. This is a gross
oversimplification, bur nor, I think, an unfair one. Insofar as
government does anything more than arrange that people shall bear the
costs of their own acts, it is, to that degree, substituting its
judgment for theirs.

At various points in this essay I will state
conclusions in terms of "optimum population" or "maximizing human
welfare." These terms have a rather technical meaning in economic
analysis. both weaker and more specific than what they suggest in
normal speech, and it is worth stating.

A situation is optimal (technically,
pareto-optimal) if no change could be made that would increase the
welfare of one person and decrease that of no person. Here "increase
the welfare of one person" means, in accordance with the principle of
consumer sovereignty stated earlier, "give one person an alternative
he prefers."

Such a definition permits the consideration of
some changes that help one person and hurt another since several such
can be combined into a change that helps someone and hurts no one.
But the concept of pareto-optimal does nor allow the comparison of
all possible alternatives with one another. It is used in economics
because no satisfactory definition of optimum that does permit all
such comparisons has been found.

IS POPULATION A SPECIAL CASE?

The general economic arguments in favor of freedom
of choice--laissez-faire--can be found in the textbooks (2). They
consist essentially in showing that, under a properly functioning
free market, the prices (monetary and otherwise) people pay for
things reflect the real cost of producing those things, and the
prices they receive reflect the value of what they produce to those
who use their products. When an individual makes economic decisions
he therefore bears all of the resulting costs (either directly, as
when he spends his time doing something, or indirectly, when he pays
in money the cost borne by someone else who spends his time) and
receives all of the resulting benefits (either directly, as when the
benefit is his pleasure in doing the job, or indirectly, when he
receives money from someone else who consumes what he produces). If
total costs are less than total benefits, he should make that
decision and will, since he, as well as the society as a whole,
benefits. If total costs are greater than total benefits, he should
not and will not.

Is this argument applicable to the decision to
have a child? The answer depends on two questions. The first, which I
shall discuss in this chapter, is whether there are special features
of that decision such that a parent, even if he bears all the costs
and receives all the benefits, is incompetent to make it--or, more
precisely, less competent than someone else The second question,
which I discuss in Chapter 2, is whether, and to what degree, parents
bear the costs and receive the benefits resulting from their decision
to have children.

Let us start, then, by assuming that the decision
to have a child imposes no costs outside the family--an assumption
that will be discussed in detail in Chapter 2. Are parents for some
reason incompetent to make that decision? The decision to "buy" a
child is different from the decision to buy a box of soap in
important ways. First, the purchase requires long-term calculation;
second, it is only made a few times. The purchaser of soap can try
the soap out, see how his laundry looks, and buy another brand next
time. The experiment takes a few weeks, and the cost of a mistake is
a dirty shirt. By the time a parent finishes discovering whether he
really likes bringing up his first child, he has already had his
list. By the time it is clear what kind of world the children will
live in--a question relevant to whether they should be brought into
it--the children are grown and the parent, a grandparent.

In deciding whether to have another child, a
parent must rely on his guesses about the future; those guesses are
likely to be wrong. And even if the parent is extraordinarily wise,
there are limits to how far ahead he will bother to plan. For most of
us, what happens 40 or 5O years from now is of less than urgent
concern.

But this is even truer of the government. The
alternative to having parents decide the number of children they have
is having the government decide the number of children to be had. In
making that decision, the government is in the position of a consumer
consuming a commodity once. The time span for which the government
must plan is nearer 100 years than 50. And the government that does
that planning has not a proportionately longer time horizon than the
individual parent but a shorter one.

Aggregate population responds slowly to changes in
fertility. It has been calculated that if fertility rates fall during
the next five years to a level corresponding to a long-term stable
population (net reproduction rate of 1.0) it would be over 50 years
before the U.S. population stabilized, and the population would
stabilize at a level 36 percent higher than the present population.
If an NRR of one is reached by the year 2000, we will not approach
our maximum population until about 2050. Thus, even if government
policies could affect fertility rates immediately, the effects would
be felt over the next few generations.

But experience suggests that the government makes
decisions almost entirely on the basis of short-run calculations.
Familiar examples are economic policy--notoriously calculated for its
effect on economic conditions at the next election--and foreign
policy. Thus, we have "reliable sources" saying that President Nixon
plans to have combat forces out of Vietnam "by the election," and
frequent predictions, some from near the President, of GNP and
unemployment as of the autumn of 1972. The perfection of economic
science may yet produce a permanent four year business cycle, peaked
in election years.

It appears that, although the decision of how many
children to have is a difficult one for parents to make correctly, it
is still more difficult for government, and government is even worse
equipped than the parents to make it.

It can be argued that the government can afford to
gather much more information for its decisions than the individual
parent. This argument is true, although practical experience may make
us doubt that decisions actually made by government are wiser than
those of individuals. But even if the government is wiser, it has an
enormously more difficult problem to solve. Each parent need only
decide on the costs and benefits to himself and his child of having
the child. The effects of increased population on the welfare of the
poor (assuming the parent is not poor) or the climate of the earth
and the effect of different age distributions of population on the
social structure of the society are almost irrelevant. The parent
need only estimate the effect of increased family size on his family
and the effect of a particular age distribution of his children on
his problems in rearing them. It is precisely this sort of division
of labor, under which an unmanageably large problem is divided into a
multitude of parts, each to be solved by the individual that that
part affects, which makes the free market such an efficient mechanism
for solving economic problems.

True, the government may be better able to hire
experts to extrapolate present trends and calculate what sort of
world our children will live in. If so, let it make such calculations
and publish them. Individual parents will then be free to use those
predictions in their decisions--allowing for their own experience of
the reliability of government predictions.

Some writers claim that, experimentally, parents
are totally irrational consumers and that arguments like the above,
which assume some degree of rational calculation, are thus invalid.
If parents decide to have children entirely on the basis of what they
have been brought up to view as a "good" family size, independent of
any economic calculations of present or future costs, population,
left to itself, will behave randomly and perhaps catastrophically. It
might be hoped that government control, however clumsy, would be an
improvement.

This case--the "irrationality" of the decision to
have children and,hence, the irrelevance to it of economic analysis
is the basis of Judith Blake's attack (3) on Gary Becker's economic
analysis of fertility (4). The attack applies to my analysis as well
as to Becker's; the controversy is therefore worth a brief
examination.

Becker argues, on the basis of his analysis, that
family size should correlate positively with income and that it fails
to do so only because low-income parents are unable to plan their
families. He presents evidence that, where contraceptive knowledge is
equally available to all economic classes, such a positive
correlation exists. Blake argues that studies of how many children
parents want show a negative correlation with income.

There are two things wrong with Blake's argument.
The results of the studies she lists do not conflict with Becker's
prediction. Her explanation of why Becker's prediction is wrong does
not conflict in any fundamental way with his analysis.

In most of the studies Blake sites, subjects were
asked such questions as, "How many children do you think makes the
nicest size family?" and, "What would be the ideal number of children
for the average American family?" As a way of learning how many
children people will choose to have, given the constraints of their
incomes, that method makes as much sense as measuring demand for cars
by asking the question "How many cars of what kinds would it be nice
to have?" Rolls Royce and Cadillac would discover new markets of
astonishing size.

Only three of the studies Blake lists asked
parents how many children they themselves wanted to have. In all
three there was a small positive correlation with income.

The effect is clearer in later studies (5) that
correlate number of children desired with both family income and cost
of rearing children as measured by the income the wife could get if
she worked instead. The number of children desired goes up with
income but down with cost. That is how most demand curves
behave.

The exception is the so called inferior good. The
demand for Fords might fall with increasing income. Becker asserts
that children do not appear to be an inferior good since it is not
obvious that there exists any better (but more expensive) substitute.
Much of Blake's argument is reduced to the assertion, not that
parents are irrational consumers, but that children are an inferior
good--inferior to golf, business, and the League of Women Voters. If
this assertion is true, it contradicts one of Becker's assumptions
but not the basis of his analysis.

Additional evidence on consumer rationality can be
found in secular fertility trends. Over the long term, the net cost
of rearing children has been rising because of the movement away from
the use of child labor (especially on the farm), the increasing cost
of schooling, the increased opportunities for the mother outside of
the home, and the gradual disappearance of the traditional pattern of
children supporting parents in their old age. Under these
circumstances we would expect rational parents to decrease the size
of their families. They did.

Consider also the effect of economic conditions on
fertility. At the bottom of a depression, with short term income low
and longterm prospects--for both parents and children--bleak, birth
rates should fall. They do.

There is also evidence in the behavior of parents
in various countries before the industrial revolution. As David
Landes says in Unbound
Prometheus (6, p. 22); "...insofar as
there were variations in birthrate-and they range from 55 to 60 per
thousand in Colonial America and French Canada to 15 per thousand in
Iceland at the beginning of the eighteenth century-they seem to have
been closely related to the ratio of resources to population ...an
excellent example of rationality in a particularly crucial and
sensitive area of life."

It thus appears that consumer rationality, while
doubtless imperfect, exists. And imperfect consumer rationality must
be compared to the imperfect rationality of a government that
reflects the imperfections of its constituents. I see no reason to
suppose that individuals will be less rational in their private
population decisions than in their political ones. Political
decisions, after all,have an externality of almost 100 percent; the
good result of a wise vote is divided equally among the whole
population. There is, therefore, little incentive for the voter to
spend much time or effort to vote wisely.

2

The Logic of Externalities

Garrett Hardin, in a justly famous essay (7),
argues that the dilemma of population "has no technical solution." He
uses the metaphor of a commons used by several herdsmen but owned by
none. The commons will be overgrazed since each herdsman receives all
of the benefit from adding another animal to his herd and divides the
cost of the resultant overgrazing with the other herdsmen. Hardin
applies the same analysis to population. Each new child imposes costs
not only on it parents but also on others. As with the commons, the
benefit goes to the individual making the decision, but he need pay
only part of the cost. "Each man is locked into a system that compels
him to increase his herd without limit-in a world that is limited.
... Freedom in a commons brings ruin to all."

The argument, as Hardin states it, contains a
fundamental error. A commons will be overgrazed, but there is a
natural limit to the size of the herd, and that limit may be reached
before the commons is grazed to extinction. Under some circumstances
overgrazing will be slight.

Hardin asserts that the positive utility gained by
the herdsman who increases his herd is +1 and the cost he pays is
only a fraction of -1 since he divides it with others. He neglects to
say what values are being multiplied by +1, in the one case, or a
fraction of -1 in the other.

The correct statement is that the herdsman gets +1
times the value of grazing an additional animal and a fraction of -1
times the cost. Hardin implicitly sets cost equal to value. This is
true only when the commons is bearing the optimum number of animals
since at the optimum any small change costs exactly as much as it
produces. This is the familiar equilibrium condition of economics.
His argument proves only that if the number of animals is optimum it
will be in the interest of the individual herdsman to add more so
that a commons will always have more than the optimum number. The
herds will stop increasing when the return from an additional animal
falls below the value of that part of the cost paid by the individual
herdsman; at that point, even though he absorbs only part of the
cost, the addition is still unprofitable. This point usually occurs
before the commons is grazed to extinction.[1]

This analysis is important for population. Under
Hardin's argument, as he concedes, there is no problem as long as the
parents of a child, and the child himself, bear all the costs
resulting from his birth. But, he argues, that condition does not
occur. Since we are not willing to let children starve, one man's
child may become another's dependent. In addition, the new child
imposes some of the costs of his life on existing "common" property
through pollution. Thus parents and child bear only part of the
cost.

But how large a part? Hardin makes it sound as if
any fraction less than unity implies catastrophe, but that is
nonsense. If 99 percent of the cost of children is borne by the
general public, the forces of the market will not regulate population
at all successfully. But if 99 percent of the cost is bome by the
parents, population will only rise to that degree of overpopulation
at which the cost of an additional person is 101 percent of his
"value."

To analyze the degree to which parents will or
will not decide to have the "proper" number of children, I must first
discuss the nature of what economists call "externalities," and then
go on to discuss the particular sorts of extemalities connected with
the birth of a child.

An externality is a cost imposed upon one person
by another person's action without the first person's consent. The
economic arguments for a policy of laissez-faire depend on
individuals bearing the costs of their own actions. Given that
condition, one can argue that laissez-faire will produce the best
possible economic decisions. Each individual bears all of the costs
resulting from the decisions he makes and receives all of the
benefits; it is thus in his interest to make the decision that
maximizes net benefits.

Suppose that we accept this argument. There
remains the critical condition that each individual bears the costs
(and receives the benefits) of his own actions. That this is the
normal situation in a private-property economy has been argued at
great length elsewhere (2). There are,nonetheless, exceptions; these
are what we call externalities. Externalities an be divided into two
classes: transfer effects and net externalities. A transfer effect is
an externality resulting from actions of A that transfers wealth from
B to C while doing no net damage. For example, suppose I become a
physician. The good I do my patients is compensated for by the money
they pay me; there is no externality unless I over or undercharge. In
addition, by increasing the total number of doctors I, through the
law of supply and demand, slightly lower the price doctors are able
to charge. All other doctors are slightly poorer; all their patients
are slightly richer. This is a transfer effect. Since economists have
no satisfactory basis for comparing the desirability of alternative
distributions of the same wealth, they generally ignore transfer
effects except for occasional comments on the "social desirability"
of the resulting distribution of wealth--generally defined as its
congruence with their readers' prejudices. I shall follow this
practice.

There remain net externalities, such as pollution.
I burn leaves on my lawn. The smoke annoys my neighbors. I receive
the benefit of clearing up my lawn without the cost of having the
Ieaves hauled away; my neighbors bear some of the cost. I may decide
to burn leaves even if the total cost of doing so (my time and
trouble plus my neighbors sore throats and watering eyes is larger
than the cost of alternative means of disposal.

This is a negative externality; I harm others
without their consent. There are also positive externalities. If I
spend time and money keeping my lawn and garden beautiful, my
neighbors receive part of the benefit. I might fail to keep up my
garden even though the benefits exceed the costs; I pay all the costs
and get only some of the benefits.

If the positive and negative externalities of an
act are equal, the result is either no externality (if the positive
and negative externalities are distributed in the same way among the
same individuals) or, at most, a transfer effect. My clearing leaves
off my lawn, and so improving its appearance, may be a positive
externality to exactly the same neighbors who suffer a negative
externality when I bum the leaves. If the alternative to burning the
leaves is leaving them alone, the two externalities may cancel; to
the extent that they do, the incentives determining my action will
correspond accurately to its real costs and benefits. In deciding on
the merits of laissez-faire with regard to population, we must try to
compare the total positive and negative externalities resulting from
a child's birth.

The calculation is made more difficult by the
question of whether the externalities are those eternal to the
parents or external to the family as a whole. We begin by considering
the family as a single unit. We shall then go on to discuss the
implications of the distinction between the interest of the parent
and of the child.

Considering the family as a single unit mans,
implicitly, allowing the parents to make decisions for the child on
the basis of costs and benefits to be borne by the child during his
lifetime. This seems inconsistent with the idea of having each person
bear the costs and benefits resulting from his decisions.

But the decision to conceive a child is made
before the child exists. It must therefore be made by someone else;
the question is by whom. Our normal assumption, with regard to other
decisions affecting the child, is that the decision should be made by
the parents. The parents, on the average, are more concerned with the
welfare of their child than is any other adult; thus transferring the
decision from the parents to the government (which is to say, to the
other voters acting together) makes matters even worse. The parent,
as decision maker, is the closest approximation to the child himself
that is available.

Putting it in terms of externalities, the parents,
more nearly than any other adult or group of adults, internalize the
child's costs; they perceive costs to their child as costs to them
and benefits to their child as benefits to them.

If we consider the family as a single unit, most
net externalities that seem implicit in social welfare legislation
disappear. This fact can be seen by considering the externalities
connected with government support for schooling.

When I decide to have a child, that decision
imposes a cost on the taxpayers who will have to pay for the child's
schooling. When the child grows up, he himself pays taxes for other
children's schooling. The cost of his schooling is a negative
externality, but the school taxes are a positive externality; his
existence (age 25) does not increase schooling costs, but his taxes
lower the burden of those costs for other citizens. In comparing the
positive and negative externalities we must make due allowance for
the fact that the negative externality comes immediately and the
other is delayed several decades. The consequence is that the two
externalities will exactly cancel fur the average individual, if and
only if, the rate at which total school expenditures are increasing
is the same as the market interest rate. This has been approximately
true of late.

To put the same analysis a little differently, the
parent, deciding whether to have children, must calculate, implicitly
or explicitly, all of the costs and benefits resulting to himself and
the child. In that calculation, the total cost for education will be
less than the real cost to the society as a whole. But the total
income the child will get will also be less than his total
productivity (the benefit to the society as a whole) by (among other
things) the amount of taxes he will pay for school
expenditure.

It might be argued that the child, by having
children himself, will impose additional schooling costs on the
society and that his taxes arc needed to make up for those costs. But
those children will themselves be taxpayers, and each will eventually
pay for his own education. By pairing up the costs and benefits
resulting from the first decision to have a child, ignoring both
costs and benefits of later decisions by that child to have children
himself, we show that the net externality for the average child is
about zero.

What about the nonaverage child? If a particular
parent expects

to receive more the the average subsidy for
schooling but expects that his child will pay less than the average
in taxes, then for that family government subsidy of schooling is a
subsidy to have children; his childbearing has a net negative
externality. For a parent in the opposite situation, there is a
positive externality; thus, ignoring all other effects, he would have
fewer children than he "should."

As far as elementary and secondary .schooling are
concerned, this effect is small. School taxes and per-pupil
expenditure are both closely related to parents' income, as is the
child's later income. A particular child, according to where he lived
and how much he earned, might end up paying more (or less) than the
cost of his schooling in taxes. But unless the parent can predict
this amount in advance, it cannot influence his decision to have the
child.

Institutions of higher education are another
matter. They are attended by only a minority of the population, and
that minority comes mostly from the upper socioeconomic classes.
Since most pupils are at heavily subsidized public institutions, the
cost is borne largely by state taxes; the incidence of state taxes
tends to be somewhat regressive. There is, thus, one well defined
group that can expect to have its children's education subsidized by
more than the children will later pay to subsidize other children's
education. There is another group for which the opposite is true.
Subsidy of higher education implies a negative externality from the
bearing of rich children and a positive one from the bearing of poor
children.

Welfare expenditures create externalities in the
opposite direction. A parent whose children are likely to receive aid
for dependent children can expect to receive more than the average
per-capita expenditure on welfare; since the children will probably
have below-average incomes, they will probably pay less than the
per-capita average in taxes toward welfare. Thus, welfare implies a
negative externality from poor children and a positive one from rich
children.

In all of these examples the total externality
(for the population as a whole) is zero. What some lose, others gain.
Some parents have an incentive to have too many children, others too
few. These effects may or may not cancel in such a way as to leave
the total birthrate unaffected; even if they do cancel, they will
still alter the distribution of that birthrate.

Pollution is a different problem--a game in which
everyone can lose. In a society where polluters are not forced to
bear the costs of their pollution, an extra person is, among other
things, an extra polluter. Since the act of pollution itself involves
externalities he will pollute even when the benefit he gets (by lower
operating costs in a factory, for instance) is less than the damage
done to others. His existence causes costs to others that are not
matched by any equal benefit to him. His parents' decision to have
him, therefore, has a net negative externality.

National defense is a similar case. The cost of
national defense is virtually independent of the number of people in
the area being defended. Some elements of that cost, such as the
expense of recruiting an army of a given size, actually fall with
increasing population. An additional child causes no increase in the
cost of defending the country. But a child grows up to become a
taxpayer. The taxes he will pay for national defense will lower the
cost of that defense to the rest of the population; they are a net
positive externality resulting from his birth.

Another externality is the effect of increasing
population on fixed resources of land, raw materials, and so on. But
this is only a transfer effect. Any fixed resources that the
additional child consumes he gets by exchanging the product of his
labor (or money inherited. or something else that is his) for them.
The person giving up those resources receives something he considers
of equal value: otherwise he does not make the deal. The additional
demand for fixed resources raises their cost, but this merely causes
a transfer from those who buy those fixed resources to those who sell
them. How important the effects of that transfer are likely to be I
will discuss later; in any case, no net externality is
involved.

So far we have considered the family as a whole.
If we consider separately the interests of parents and children, the
analysis becomes enormously more complicated.

A situation in which a parent makes decisions in
terms of costs and benefits to his child allows the possibility of
either the parent sacrificing the child's interests to his own or the
parent sacrificing his own interests to the child's. One can best
avoid this problem by arranging for the parent himself to bear all of
the costs direct!y resulting from the parent's decisions, while the
child bears costs resulting from decisions the child makes; thus,
each will have the proper incentive to make the proper
decision.

Consider, for instance, schooling. Since, under
present law, schooling is compulsory for a certain number of !ears.
bearing a child results directly in the cost of that schooling. We
argued above that the net externality on the family as a whole is
about zero. But that net externality of zero is made up of a subsidy
paid to the parent and another subsidy paid by the child. So a parent
who has children does not bear the full cost of his act; some of it
is imposed upon the children. A relatively selfish (or short-sighted)
parent would have more children than if he had to bear the real costs
himself.

The ideal situation would be one in which there
were no externalities inside the family or out. Each person would
make decisions for which he would bear the full costs. The problem is
that being born (or not being born) has a significant effect on the
child's life. In principle, having been brought into the world, one
can always leave it if one does not like it; in practice, few
individuals view suicide as a viable alternative.

So the best one can do is to make sure that the
parent bears the costs resulting directly from his decisions. This
procedure would include the costs of compulsory schooling, feeding,
and clothing the child until he is old enough to make decisions for
himself. It would not include the cost of going to college; that
decision the child can make for himself. He will receive most of the
benefits and should pay the cost.

The results of this analysis, in summary,
are:

For the pattern of births to be that which most
nearly maximizes human welfare:

1. The net externalities of childbearing, as
perceived by parents when they decide to have children, should be
zero. If the net externalities for most parents are positive, they
will be led to have too few children, if negative, too many. If the
externalities are positive for some and negative for others, the net
birth rate may or may not be distorted, but the distribution of
births among families will be.

2. Those costs of childbearing that result
directly from decisions of the parents should be borne by the
parents. Those that result from decisions of the children should be
borne by the children.

Condition I by itself will be sufficient, provided
that parents can be trusted to make decisions correctly on behalf of
their children. Condition 2 is an imperfect attempt to provide for
the difficulties that result if parents cannot be trusted to do
so.

3

CALCULATIONS

In comparing the various costs connected with
bearing children, we must allow for the fact that they are paid at
different times. This allowance is usually made by discounting the
value of each expenditure back to a common point in time.

Suppose, for instance, that an individual is in a
position either to borrow or loan money at 5 percent. To him, a cost
of $100 today is exactly equivalent to a cost of $105 a year from
today. He can convert the former to the latter by paying it with a
loan that matures in a year; he can do the reverse by lending out
$100 now and collecting back $105 just in time to pay the
cost.

Thus, one can add together a series of costs
spread over time by "discounting" each cost back to the same initial
point. If the costs were $100 today, another $100 five years from
now, and another $100 ten years later, one would add together the
first $l00, the second $100 discounted back five years (multiplied by
l/1.05)5, and the third $100 discounted back 15 years. The sum is the
amount which, if he had it today, would pay off all three costs. In
this example the sum is $226. The first $100 of that will pay the
initial cost. The next $78, lent out at 5 percent, will be just
enough in five years to pay the next $100. The remaining $48 will
have grown to another $100 when the third bill comes due.

Real people are rarely in a position to borrow or
lend unlimited amounts of money at a single interest rate; it is
therefore less than obvious what rate should be used in calculating
the discounted value to an average parent of future costs. I have
calculated all my numbers for two rates--5 percent, about what one is
likely to receive from a savings account, and 10 percent, the
approximate rate one is likely to be charged for borrowing money and
also the approximate average return on money invested on the stock
market.

The table on page 19 shows the total value of
various costs of and subsidies to childbearing, discounted back to
the date of birth. All calculations are approximate. I have assumed
that the child is a dependent of his parents until his eighteenth
birthday, becomes a taxpayer at age 20, earns a constant income from
20 to 64, and no income thereafter. The child is assumed born in
1971. Assumptions about future population growth went into some of
the calculations, but the results are not sensitive to them.

One column shows the total value discounted at 5
percent. The next shows it at 10 percent. The column after that one
shows the total number of people receiving the particular subsidy at
any instant, and the next one shows the percentage of the population
that eventually receives the subsidy. It should be noted that a
larger number does not necessarily mean a larger percentage since the
total subsidy may be received over varying periods of time. A subsidy
that goes to 10 percent of the population, if given to each recipient
over a period of one year, is being given, at any instant, to 20
million people. If it is given over two years, the number will be 40
million.

The figures for the subsidy in aid for dependent
children have been calculated on three different assumptions. Line 4a
assumes that every recipient child is on aid from birth to age 19; 4b
assumes that parents become self-supporting when the child gets to be
eight (and, presumably, requires less attention); the third assumes
that the parents go on aid when the child is five, and remain until
he is 19 (and no longer eligible). The total number of children
receiving the subsidy varies with the assumption; in reality, of
course, different families follow different patterns.

In looking at the table, the first thing we note
is the relatively small size of most of the externalities compared
with the cost borne by the parents themselves. If we consider those
externalities external to the family as a whole, we have, for the
"average" child (who neither gains nor loses on welfare or higher
education), only line 3. For the welfare child, we have the sum of
line 3 and one of lines 4a, b, or c. For the upper-class child who
goes to a state university, we have the sum of lines 3 and 6. If we
consider the 5 percent interest column and use line 4c, the net
subsidy to the poor is about 5 percent of the cost of bringing up the
child. This is presumably an underestimate since the cost will be
lower for a poor child as will the amount he can expect to pay for
defense; still it suggest that even in the extreme case of an
aid-for-dependent-children child, the net subsidy is not all t!hat
high. For the upper-class child, the net subsidy is

Table

Subsidy (thousands of dollars)

Number of recipients at one instant (millions)

Fraction of Population affected (%)

Line

Item

(at 5% interest)

(at 10% interest)

1

Total monetary cost borne by a family on
a moderate income in bringing up its third child.

22

12

2

Savings from tax deduction of $750 per
year

1.8

1.4

3

Cost to child of fixed expenses of govt.
($107 billion per year in defense, veteran benefits, and
interest on the national debt, imposing taxes of $690 per
year per adult age 20-64)

-4.6

-1.1

Subsidy in aid for dependent children,
per child @$760 per year, if received

9.7

7

6

9

4a

ages 0-18

9.7

7

6

9

4b

ages 0-7

4.9

4.5

6

26

4c

ages 5-18

5.6

3.7

6

12

5

Expenditure on public elementary and
secondary schools: $940 per year ages 6-18

6.4

4.2

44

87

6

Govt. subsidy to public higher education:
$1,800 per year ages 18-21

2.7

1.1

6

39

7

Govt. subsidy to private higher
education: $1,400 per year ages 18-21

2.1

.9

2

12

Line 1: Source: reference 8

Line 3: All of these items are roughly
independent of future changes in population; the analysis
applicable to defense is therefore applicable to the others
as well. By ignoring the tendency of income to be higher in
later years, I have probably overestimated the magnitude of
this term. On the other hand, the assumption that defense
spending will remain fixed may be overly optimistic.

Lines 6 and 7: The figures probably
overestimate the subsidy to students; I suspect that much of
the money is actually spent to subsidize research, which has
little effect on the cost to parents of rearing their
children.

Lines 3-7: The numbers were all
calculated from figures in the 1971 Statistical Abstract
(9).

-$1,900, or about 9 percent of the cost. One
should perhaps increase line 6 to allow for the probability of
postgraduate work; on the other hand, line 3 underestimates here,
just as it overestimated before.

If we use the 10 percent interest for our
calculations, the subsidies are about 22 percent for the poor child,
and zero for the rich one.

Next we do the calculation in terms of the
short-run interest of the parent. For the average parent this
calculation means adding line 2 and lines 4 (a, b, or c), 5, 6, and
7, each multiplied by the fraction of children involved. Using 4c we
get $9,300 for 5 percent interest or about 42 percent of line 1, and
$6,000 for 10 percent interest, or about 50 percent.

These numbers are much higher than the previous
ones. If, conceptually, we are calculating in terms of the interests
of people presently alive, we should include some fraction of line 3,
which would somewhat reduce the total; after all, many of those
presently alive will still be paying their taxes when the child
starts paying his and thus lowering the per-capita cost of defense.
We should not include his tax contribution to education, however;
that must be offset by the educational costs of his offspring. We
were able to avoid doing so on the earlier set of assumptions because
their costs could be borne by their own later taxes, but those taxes
will be paid long after most of the people presently alive stop
paying taxes--or doing anything else.

So, after reasonable corrections, the subsidy to
childbearing, calculated in terms of costs and benefits to the
present generation, is about 40 to 50 percent of the monetary costs
to the parents. The majority of this subsidy comes from one
item--free public schooling. Aid for dependent children is a
relatively minor amount; even if we added in the cost borne by those
presently alive as a result of a child going on welfare when grown
up, it would make little difference.

What about the subsidies to specific, nonaverage,
parents? For a child on aid for dependent children the savings from
tax deduction can be ignored; the parent is not paying taxes.So,
adding lines 4c and 5, we get a subsidy of $12,000 for 5 percent
interest and $7,900 for 10 percent interest. These are probably
overestimates since for the poor child less than the average will be
spent for his schooling.

For a child who goes to a state university, the
sum of lines 2, 5, and 6 gives a total subsidy of $10,900 (5 percent
interest) or $6,700 (10 percent).

It is interesting to note that the total subsidy
to the rich child and the poor child are about the same (although the
subsidy to the poor is larger relative to the poor family's income
and thus to their expenditure on the child), while the number of
children eventually subsidized is three or four times as high for the
rich as for the poor.

Our overall results are that net subsidies, if we
do our calculations in terms of the long-run interest of the family,
run about plus or minus 20 percent of the monetary costs of rearing
the child, varying according to what particular part of the
population we consider. If we calculate in terms of the interests of
the present generation (assuming, in other words, that parents take
no account of future costs and benefits to their children) the
subsidy can run to more than 50 percent. How large an effect
subsidies of this size can have will be discussed in the next
chapter.

It must be repeated that the numbers are highly
approximate; using 4a or 4b instead of 4c would alter some of them
significantly. Furthermore, line I includes only monetary costs and
doubtless represents even those costs poorly for families at one
extreme or the other of income.

4

HOW BIG
IS BIG?

In this chapter I estimate the effect on
population produced by a given amount of externality in order to
translate the conclusions of the previous chapter into birthrates and
population sizes. There is no good way of making this estimate, but
the least bad is probably to take advantage of some calculations done
by Jacob Mincer in 1963

Mincer calculated demand equations for children as
a function of family income and wife's income (when employed). He
conjectured that, for a given family income, the higher the wife's
income, the smaller the number of children since a large part of the
cost of rearing children is the time of the mother, and the value of
that time is greater the larger the mother's potential salary. The
results of his calculations confirmed that conjecture; number of
children increased with family income (wife's potential income held
constant) but decreased with wife's potential income (family income
held constant). The numerical results of these calculations give us a
measure of the effect of cost of children on the number of children a
family has. A difference of wife's potential income can be converted
into a difference of total cost by estimating the number of years of
work lost by the wife for each child and discounting that cost back
to the birth of the child. A change in family size can be converted
into a change in birthrate in an equally straightforward fashion. The
result is just what we need--birthrate as a function of the cost of a
child.

Such calculations are by no means precise.
Mincer's method implicitly assumes that the number of children
depends on two or three independent factors and on nothing else. The
existence of other elements which are correlated with wife's income,
such as wife's education, can distort the results. Furthermore, even
if Mincer had an exact measure of parents' willingness to change
their family size in response to changing costs, it would apply only
to the particular groups of people he sampled. He used three samples
from 1950, one of white, urban, employed couples, one of employed
couples in large northern cities, and one of employed northern
nonfarm couples. He also used a sample from 1940 of employed couples
from large northern cities.

Although all of the results were qualitatively
similar, there were substantial quantitative differences; within the
1950 samples the coefficient linking wife's income to family size
varied over almost a factor of two. Since the makeup of all three
samples was similar, either the factor is very sensitive to the
circumstances of the parents and would vary much more if other groups
were studied or else there is a large random fluctuation, in which
case Mincer's results must be considered approximate. In either case,
one must be cautious in applying them. Unfortunately nothing better
is available (as far as I know), and we must therefore use Mincer's
data, for what it is worth; if we wish to get some idea of the effect
of subsidies (or antisubsidies) on the birthrate. I have done
so

The effect is very small. A change of $l,000 in
the cost of having a child alters the birthrate by about 1/20 of I
percent. With current birthrates, that alteration corresponds to a
change in the rate of population increase of about 1/500 of I
percentage point.

In Chapter 3 I concluded that the largest subsidy
to any particular group, under the most pessimistic assumptions, was
about $12,000 per child. That corresponds to increasing the growth
rate of population by about 1/50 of a percentage point. If that
subsidy were given to all children, the result, over a century, would
be a 2 percent change in the population.

In fact the subsidies to most children under most
assumptions are much lower, and some children are antisubsidized,
creating an effect in the opposite direction. If one accepts Mincer's
numbers, the actual effect of existing subsidies and antisubsidies,
over a century, would probably be to alter population by much less
than I percent.

Even allowing for the possibility that Mincer's
numbers may be considerably off, the conclusion is that the effect of
existing subsidies and antisubsidies on total population, insofar as
we can estimate it, is negligible

One cannot be quite so optimistic about the
effects on the growth rates of different groups within the
population. The larger figures for the subsidies may be applicable to
the whole group even though not to the whole population. Even more
important, the members of some groups--in particular very low-income
parents--may behave quite differently from the people Mincer studied.
If we try to allow for this difference by multiplying Mincer's figure
by a factor of ten, the conclusion is that the effect on the groups
most sensitive to such effects might be a change of about 20 percent
over a century. That is larger but not, I think, large.

One can reasonably object that all of these
calculations, with their assumptions and inferences, depend on very
artificial assumptions about human behavior, assumptions that may
prove false. This is true, as it is true of all economic argument.
But the defense--as with all economic argument--is that we must make
the best calculations we can and use them until we can make better.
The uncertainty of the derivation of one number is no ground for
rejecting it in favor of another that has no derivation at all.

5

SUGGESTIONS

The ideal situation is one in which parents are
free to decide how many children they have, but everyone involved
bears the costs of his own decisions. I have argued that present
institutions approximate that situation much more closely than is
often supposed, especially if we accept the idea of parents making
decisions for their children. What changes in our institutions would
bring us closer still?

In answering that question, I will try to limit
myself to the effects of our institutions on questions of population.
Obviously, existing institutions have, or at last once had, some
intended purpose; if that purpose is sufficiently important, it may
be desirable to retain the institution even if its effects on
population are undesirable. To attempt to discuss the desirability
and undesirability, in every respect, of every institution affecting
population would carry us far afield. Although I will sometimes
discuss the purposes of such institutions, principally to see whether
the effect on population can be eliminated without affecting the
original purpose, I will leave it to the reader to decide whether the
alterations that I advocate on population grounds are, all things
considered, worth making.

The first step in reducing externalities is to
reduce or eliminate all subsidies to childbearing. Insofar as the
family is considered as a unit, the main subsidies to childbearing
are state higher education and welfare. The former should be
eliminated. Insofar as it is desirable that able individuals without
financial resources be able to go to college, their expenses should
be financed by loans to be paid back from their later income; such a
plan has recently been introduced by Yale University.

Welfare is a more difficult problem. If we treat
the family as a whole, there is no way to achieve the objective of
welfare--subsidizing poor people--without subsidizing the production
of poor people, that is, the birth of children to poor parents. The
only solution is to abolish welfare.

If we assume, however, that individuals,
especially poor individuals, make their decision primarily in terms
of immediate costs and benefits to them, and only to a much lower
degree in terms of future costs and benefits to their children,
additional alternatives become available. Such an assumption might be
justified--for the poor--by the class analysis of Banfield (10), who
argues that the lower class, which provides most of the welfare
population, is characterized, even defined. by the possession of a
very short time horizon. If this argument is true, it is only
necessary to make childbearing a losing proposition for the parents,
not for the family as a whole. It can be made so by making the
welfare payments received by a family independent of the number of
children. In terms of calculations of "need" this procedure would
oversubsidize small families, undersubsidize large ones, or do both.
But it would also impose the cost of an additional child entirely on
the parents. The disadvantage of this imposition is that they may
transfer the cost to the child, thus thwarting the purpose of the
program.

There is another possible approach to the problem.
Insofar as parents are completely selfish and shortsighted, they
presumably do not want children, and aid for dependent children will
only cause childbearing if the aid makes childbearing not merely
cheap,but profitable; if, in other words, the amount given per child
is more than the parent spends. Reducing the amount is not a
satisfactory solution; a sufficiently selfish parent could always
reduce the amount he spent below the minimum necessary to take
reasonable care of the child, at which point aid for dependent
children would no longer fulfill its original function. It is
difficult, expensive, and perhaps undesirable for the welfare agency
to watch the parent closely enough to be sure how much is spent on
the child.

The obvious solution is to make the subsidy partly
or entirely in kind instead of in cash. The government might, for
instance, offer free nutritious meals to all children, as in a free
lunch program, instead of paying the parents, as in aid for dependent
children.

If we are going to argue in terms of the interest
of the parent, instead of the family, we must consider another
subsidy to childbearing that is an order of magnitude larger than the
subsidy in child welfare. That is, of course, the subsidy of
elementary and high schools. The same arguments imply that that
subsidy should be ended and parents required to bear the full cost of
schooling their children.

Traditionally the argument for public schooling
has been that the child's education benefits not the child himself
but the whole .society; as a more productive worker he makes all of
us rich. Were that argument correct, his contribution to all of us
would be a positive externality, balancing the cost of his schooling.
But it is not correct. To the extent that an educated individual is
more productive, he is able to command a correspondingly higher
salary; so the benefit of his schooling goes primarily to him.

A variant of this argument holds that we all
benefit by the wise voting of educated individuals. Evidence for this
thesis is hard to find. Some of us may share William F. Buckley's
opinion that we would be better off ruled by the first 1,000 names in
the New York City telephone directory than by the faculty of
Harvard.

Even if we do benefit from everyone's schooling,
we certainly do not get all, or even most, of the benefit. So this
argument implies at most that government should subsidize a small
part of the cost of schooling; $40 billion a year for schooled voters
is a little steep.

One could argue that if grade-school dropouts are
going to go on welfare, subsidizing their .schooling is cheaper than
supporting them for the rest of their lives. This is, at most, an
argument for subsidizing the schooling of the very poor. Even for
them, if the argument is correct, it might be better to make
schooling compulsory but make the parents pay for it out of their
welfare checks; that would increase still further the "oversubsidy"
of small families or the "undersubsidy" of large ones, but it would
also impose on parents the true cost of having children.

I argued earlier that, if polluters are not forced
to bear the cost of their pollution, childbearing has negative
externalities. It is thus desirable, from the point of view of
population, to alter our legal institutions in such a way as to
impose the cost of polluting on polluters. Ways in which this might
be done are discussed at some length by Dolan in his new book
(11).

Tax deductions for children mean that a parent's
decision to have children imposes higher taxes on other taxpayers;
these deductions are a negative externality. Its size, as the table
shows, is small, and comparable to the size of the positive
externality resulting from the lower per-capita fixed expenditures of
a larger population. The former is an inducement to parents to have
more children than they would otherwise want; the latter is a reason
why present taxpayers should want to provide an inducement of about
that size. Considered in terms of cost to the whole family, it is not
an externality at all for the same reason public schooling is not.
There seems to be no pressing argument for raising the exemption,
lowering it, or leaving it where it is.

Obviously, since my analysis implies that present
subsidies to childbearing should be abolished, it also implies that
new ones should not be instituted. Free child-care centers are an
obvious example.

So far, I have dealt entirely with changes in the
direction of keeping population down and have therefore suggested
alterations in pronatalist laws. This is consistent with current
prejudices which hold that the population is obviously too big and
growing too fast. As a matter of consistency, I must also consider
laws that hinder population growth. The most important such law is
probably the limitation on immigration.

As long as they pay their own way, new immigrants
are a benefit, not a cost, to those already present. Indeed in some
ways the arguments for permitting immigration are even stronger than
the arguments for permitting parents to bear children. We do not know
whether children yet unborn would prefer existence to nonexistence.
We do know that the immigrants prefer America to wherever they came
from; if they did not they would not come. In addition to any
possible benefits to relatives, employers, customers or others of the
present population who gain by the presence of the new immigrants,
there is--unless the immigrants are all idiots who came here by
mistake--an immense benefit to the immigrants themselves.

Opponents of immigration argue that the new
immigrants compete with those already here and so drive down wages.
This is an extraordinarily antiegalitarian argument. It justifies the
sacrifice of an immense benefit to the potential immigrant--who may
presently be earning under $I,000 a year--to avoid a small cost to
far richer American workers.

In fact, if immigration did lower wages for some
jobs, this would not represent a net loss to the previous inhabitants
of the country but merely a transfer; those lower wages would mean
lower prices to the consumers of those workers' labor. And wages for
other kinds of work, complementary rather than competitive with the
new immigrants, would rise.

This whole argument assumes, of course, that the
new immigrants pay their own way. When the United States had a policy
of virtually unlimited immigration, that assumption was true
automatically since there was no substantial welfare. To make it true
again, one would have to make new immigrants ineligible for welfare
for a long enough period to discourage any who might come for the
express purpose of living on the--to them--munificent bounty of the
state.

Given that condition, the arguments of this essay
provide no reason why we should not return to a policy of unlimited
immigration.

If all the changes suggested in this chapter were
made, columns 4-7 of the table would be wiped out. This change would
reduce externalities under the largest possible calculation to less
than 13 percent (positive), and on the lowest calculation to more
than --3 percent. One would expect, if anything, the resulting
population to be slightly below optimum size.

.

6

ERGO

I have argued that even under present institutions
freedom of choice is the best way of controlling population. In
Chapter 5 I suggested ways of making freedom of choice work even
better. There remains the question of what policies my conclusions
imply.

First, of course, individuals should be free to
decide how many children they will have. This mans that birth control
and abortion should be legal. It does not mean that they should be
free. One of the costs of not having a child is the cost of birth
control (or abortion). If that cost is higher than the cost of having
a child, the child should be had; there is no reason for the
taxpayers to bear the cost of providing the individual with something
not worth enough for him to purchase for himself.

This argument breaks down if the taxpayer, rather
than the parent, is going to bear the cost of the child. In that
case, paying the parent not to bear the child may be cheaper than
supporting the child once born. This is an argument, not for the
right of the parent to have free birth control, but for the possible
prudence of giving it to him.

As for the not-poor, the argument implies that
provision of birth control devices or information cannot be justified
on population grounds. That implication does not necessarily mean
that such policies cannot be justified on other grounds. The
provision of free information by government is frequently--perhaps
too frequently--defended in terms of the "public good" argument; that
question is outside the scope of this essay.

Second, laws that coercively deny individuals some
alternatives other than having children and thus give them an
artificial incentive to have children, are undesirable on population
grounds. The laws against homosexuality, for instance, insofar as
they achieve their purpose, tend to force individuals out of sterile
relationships into fertile ones. Similarly laws against cohabitation
(reinforced by strong social pressures) tend to force individuals
into a relationship--marriage--in which childbearing is more
attractive than in the relationship--"living in sin"--that the
individuals would have preferred. It might thus be desirable, not
only to abolish laws against cohabitation, but to create new forms of
marriage contract, legally binding and, hopefully, socially accepted,
more suitable than present contracts to those who do not yet desire
children.

Here again, to say that a law is undesirable on
population grounds does not necessarily mean it should be repealed;
it might be justified for other reasons.

Third. the government should attempt, insofar as
possible, to make all laws neutral with regard to population--that is
to say, the government should try not to introduce externalities of
either sign into the decision to have children.

7

MEANWHILE

So far I have discussed what population policy is
best in terms of an analysis of decision-making by individual
parents. Of necessity such an argument is highly abstract since it
deals with questions of "what who might do if . . ." The conclusion
of my analysis was that the proper population policy would be one of
laissez-faire. The obvious next question is what the results of such
a policy would be as judged by what we know about the United States.
If all of us are going to suffocate by the year 2000, my analysis
provides only the gloomy satisfaction of knowing that we killed
ourselves in the most rational possible way. Readers may conclude
that if my best possible solution is catastrophe they should have
stopped reading many chapters ago and started looking for better
solutions of their own. Even if our general experience of government
argues that it will, "on the average," do a worse job of population
control than individual parents, it can hardly do much worse than
killing us.

The calculations used in this section assume no
radical change in the behavior of American fertility. That means that
by the year 2000, the United States population will be around 260
million and growing very slowly; if fertility rates continue to fall,
as they have been falling since the mid-l950's, the growth rate
should reach zero sometime in the twenty-first century, with a United
States population of between 300 and 500 million.

Gross national product is assumed to continue to
increase at about 4 percent per year. This rate would give the U.S.
three times its present GNP by the year 2000, and twenty times its
present GNP by the middle of the next century.

The question to be resolved is whether such growth
will run into any insuperable obstacles--whether at some point in the
next few generations Americans will find that further growth, in
population or in standard of living, is impossible, or, worse yet,
that growth which has already occurred threatens their
survival.

Basically there are four arguments for the
imminence of disaster. We will poison our lives with the pollution of
an ever larger and dirtier population. The pressure of a rising
population on a fixed supply of land (or perhaps a supply diminished
by erosion) will leave us hungry and overcrowded. The burden of too
many people on inadequate capital resources (roads, factories,
houses, etc.) will make it impossible for us to maintain our standard
of living. We will "run out of" natural resources.

I have discussed what should be done about
pollution, but not how effective, or costly, doing it will be. If
"charging polluters the cost of their pollution" means; with an
increased population, chargeing each person $20,000 a year to
breathe, the solution is not very useful. How expensive will it be to
reduce pollution, in whatever way, enough to compensate for
increasing population?

Automobiles are the largest single source of air
pollution. It is possible, at the present state of the art, to reduce
auto emissions by 90 percent at a cost of a few hundred dollars per
car. Even allowing for the possibility that poor maintenance will
substantially degrade pollution control mechanisms, present devices
should suffice to keep the pollution from automobiles, as of 2000,
down to levels below the present. If we are willing to pay for
maintenance of pollution control devices, we should be able to do
much better than that. Further, there is no reason to expect the
state of the art to remain constant, and, if it does, there appear to
be several viable alternatives to the internal combustion engine. A
substantial charge to car owners for their pollution will obviously
create a market incentive for the development of such
alternatives.

Air pollution from other sources appears to allow
similar control--especially if electric power generation moves more
and more to nuclear power.

So called thermal pollution is a problem only in a
very short-run or (as will be discussed later) a very long-run sense.
As long as we are not actually heating up the earth, thermal
pollution is an alteration in our environment, but not, in any real
sense, a degradation: a river with water temperature of 60deg. is not
essentially inferior to one with a temperature of 55deg.. There is a
short-run problem since the river is initially populated by life
forms adapted to its old temperature. But there is no shortage of
natural warm rivers from which to take appropriate life forms to
replace those that cannot accept the new conditions. How to
accomplish the smooth transition in a reasonable length of time is,
doubtless, a difficult technical problem for biologists and
ecologists, but there is no obvious reason why it should be
insoluble.

Problems of water pollution are more complicated
than those of air pollution, because there is no single large cause
comparable to automobiles. However, if we judge by current
expenditures on .sanitation and sewage treatment (about $3 billion a
year by state and local governments), water-treatment facilities
could be vastly expanded under the pressure of charges for pollution
without substantially lowering our standard of living.

What all of this suggests is that the Hardin
formula (population x standard of living=pollution) is nonsense. It
ignores the fact that almost all kinds of pollution are, at various
costs, preventable, that much pollution is already being prevented
(or treated), and that this prevention happens even though we spend a
negligible fraction of our national income on preventing pollution.
While the cost of treating or preventing the pollution attendant upon
economic growth will doubtless slow down that growth somewhat, there
is no reason to expect the effect to be large.

The absurdity of treating increased pollution as
an unavoidable by-product of increased standard of living can be seen
by comparing Belgium to India. Belgium has a much higher population
density and a much higher standard of living than India.
Environmental pollution--judged by standards as simple as the
drinkability of water and the attractiveness of the countryside--is
far lower.

So far I have not dealt with the catastrophes that
some writers have predicted--the melting of the polar ice cap,
exhaustion of earth's supply of oxygen, and the like. A detailed
discussion of these problems is beyond the scope of this essay. I
will content myself with a few comments.

The catastrophes divide themselves into the
disproven and the unproven; an example of the first is the prediction
that thermal pollution will substantially raise the temperature of
the earth. Straightforward thermodynamic calculations show that this
heating will not be an appreciable effect for over a century. By that
time we should have several solutions available--ranging from
thermonuclear power, with its much lower waste-heat-to-power ratio to
artificial manipulation of earth's cloud cover--designed to decrease
the absorption of heat from the sun and so compensate for artificial
heat production. Similarly, the arguments about oxygen break down on
the fact that the amount of oxygen in the atmosphere is many times
more than would be required to oxidize all the organic material on
earth. There is not, in other words, enough carbon in the biosphere
to turn any substantial fraction of the oxygen in the atmosphere into
carbon dioxide.

Of the unproven catastrophes, none depends for its
solution on control of population, at least for the next century or
so. Certainly none depends on the control of United States
population. All can be solved even with a growing population, and,
even with a relatively stable population, none will be solved unless
the evidence of danger becomes far less ambiguous.

One example is the possibility of global effects
from increased concentrations of DDT. The use of DDT can be
abolished; it is being abolished in the United States. If it were
clear that its continued use by other countries posed a catastrophic
threat to life on earth, those countries would stop using it--or be
made to stop. Until that happens, they will continue to use it in
increasing amounts, whether or not we control our population.

We come next to the danger that we will run out of
land. For the U.S. in the next century this is a fantasy.

The impression that people live close together
because there is nowhere else to put them is an illusion; in fact
there is plenty of room. People live close together because they like
to, because the advantages of living close together outweigh the
disadvantages. A single statistic makes this clear. To populate the
entire land area of the United States at the density of the five
boroughs of New York City, the United States would require a
population of slightly under a hundred billion. We are, in other
words, more than two orders of magnitude, that is, a factor of 100,
away from the point where lack of space will become a serious
influence on population density.

Our situation with regard to farmland, while not
quite so secure, poses no problems for the immediate future. We are
presently able to produce considerably more food than we need even
though we insist on consuming large amounts of animal protein, which
is very expensive in both land and money. Furthermore, our present
productivity per acre is low compared with that of Japan, where a
much greater scarcity of land justifies more labor- and
capital-intensive techniques. At most, a rise in population would
encourage a decreased use of animal protein in favor of substitutes,
such as the soy protein that is already coming into use, and would
make economic more productive food-production techniques. This change
to more productive techniques would directly affect the cost of
unprocessed food; the cost of processing would presumably be
unaffected. At present, we spend about $250 a year per capita to
produce food. Doubling or tripling that over the next 50 years would
hardly have much effect on our overall standard of living.

Increased population would increase the value of
land. This increase would be a transfer effect as already discussed.
Since total rent on all land is now only a few percent of national
income (and falling), even a sizable increase in the value of land
would have little effect-- "socially desirable" or "socially
undesirable"--on the distribution of wealth.

Fixed capital resources are no problem for the
United States. Since only about 10 percent of national income comes
from the rent on capital, maintaining or increasing the present ratio
of capital to population requires the investment of only a small part
of national income. Throughout this century the ratio has increased
in spite of rising population.

We come, then, to the last problem--the limiting
effect of fixed amounts of natural resources on the growth of
population and standard of living.

It must be remembered that ordinary raw materials
(iron, for instance) cannot be consumed. They can only be changed
from a more useful to a less useful form--or vice versa. Such a
change is reversible--at a price. Iron ore is changed into more
useful iron and then into still more useful steel. The steel, having
been made into automobiles, eventually becomes less useful scrap. The
scrap can, at a cost, be made back into iron.

The cost is partly a function of how the material
is used. Iron mixed with other metals is more expensive to reuse than
pure iron scrap. To the extent that iron becomes scarce, and thus
expensive, the increased cost will provide a strong market incentive
to avoid using it in ways that make it difficult to reclaim.

Whatever the problems of fixed resources with
regard to population, those problems have nothing to do with any
breakdown of the practicality of laissez-faire (with regard to
resources, not population) or the efficacy of the market. On the
contrary, to the extent that a resource is scarce, and thus
expensive, it is profitable to use it efficiently and to spend large
amounts of money to reclaim it after use. Even if the resource is not
scarce in any immediate sense, if it is predictable that it will
become scarce at some time in the future, the same effect occurs
through a more complicated chain of events. Speculators realize that
the price of iron ore, for example, will be very high in 50 years.
They therefore buy large quantities of iron ore (presumably in situ)
for speculative purposes. They keep buying it until the present price
gets as high as their estimate of its value for future use; that
estimate will be their estimate of its value 50 years from now,
discounted by the interest rate to allow for the cost of holding
resources inactive. Speculative demand (for future use) pushes up the
present price, forcing users to economize on their use.

Lest this be regarded as a purely hypothetical
analysis, I should point out that this is exactly what happened to
silver in the early 1960s. It became plain, to everyone except the
United States treasury, that the price was going to rise eventually.
Speculators therefore started accumulating silver, driving up its
price.

Examples of recycling, prompted by strictly market
incentives, are numerous. Currently about half of the iron produced
in the U.S. gets recycled. Recycling of silver, a much more expensive
material, goes to the point of extracting (during development) much
of the silver used in photographic films.

Recycling is a practical market solution to the
problems of scarce resources and one that comes into effect when it
becomes worth the cost. As long as our consumption can be met by
recycling, increased demand will at most raise the cost of raw
materials enough to pay for recycling. At present costs, it is
already profitable to do a considerable degree of recycling, so it is
unlikely that the increase required will be great. Since present
expenditure on raw materials is only about $60 per capita per year,
costs of raw marerials could easily triple or quadruple by the end of
the century without substantially diminishing our standard of
living.

Can recycling provide raw materials without limit
to any population at all? No. To understand the ultimate limits of
recycling, one should ask, not how much iron we consume each year but
how much we are using at any instant. How much iron, in other words,
is actually tied up in the cars, buildings. etc. of the United
States? You can't recycle my car--I'm driving it. However efficient
our recycling, if the population gets so large that the total amount
of iron actually in use reaches the total amount available, we must
either stop the growth of population or decrease the amount of iron
used per capita.

For materials that do not have readily available
substitutes, decreasing per-capita use might mean decreasing our
standard of living or, at least, spending resources that might
otherwise have gone to increase that standard on providing
substitutes.

It would be very interesting to know, for each of
the major raw materials (perhaps, more simply, each element), how
many pounds per capita are actually tied up, in use, in our present
society, and how those amounts compare with the total amount of that
resource available. We could then calculate how large a population
could be supported at our present standard of living before we were
forced to find substitutes.

We would also have some idea of how high a
standard of living our present population could attain before running
into the same limit. This calculation would be more difficult and
would yield a less precise result. "Doubling" one's standard of
living certainly does not mean doubling the number of pounds of food
consumed each day; it probably does not mean doubling the tonnage of
iron made use of. Still, one could get some idea of the effect by
comparing amounts used in our society by individuals of different
incomes.

I have calculated approximate figures for iron,
probably the most important raw material, and almost certainly the
one for which the necessary information is most readily available.
Given the approximations that I used, my results are probably good to
within about a factor of two.

My conclusion is that presently known world
resources of iron ore contain enough iron to provide the average
amount of iron used in the United States to a population of 40
billion. Alternatively, they would allow a world population of four
billion to have a standard of living at which the per-capita use of
iron was ten times as high as it now is in the United Stares.

In total known resources, I include both reserves
that are presently economic to work and "potential reserves," whose
quality is too low to be presently worth using. The first category
contains a little more than half the total. So even if we limit
ourselves to iron ore that is presently economic to mine, the figure
is still over 20 billion persons. If we limit ourselves to United
States reserves (which are, perhaps, most relevant for U.S.
population figures), the figure is again over 20 billion, since the
U.S. has over half the world total. If we limit ourselves to
presently usable U.S. reserves, the number drops to eight
billion--still a sizable population for the United Stares.

So running out of iron is not a serious threat,
for either the United States or the world. I suspect that similar
results would hold for other metals, but the calculations, as far as
I know, have not been done

As was mentioned earlier, problems with limited
natural resources involve transfer externalities. One effect of an
increased demand for iron is to make owners of iron ore beds richer
and buyers of cars poorer. Given the amount presently spent on raw
materials, the effect is not likely to be very significant as far as
changes in the distribution of wealth in the United States are
concerned. If, however, the United States continues to be a net
importer of raw materials, the rise in these prices will benefit the
exporting countries; since the exporting countries tend to be very
poor, the effect might be significant for them. In total, it might
involve the equivalent of a once-and-for-all capital transfer of
between $10 billion and $100 billion.

There is only one natural resource that is not
recyclable. That is entropy (12), which may be conveniently thought
of as usable energy. It is the use of entropy (strictly speaking, the
increase of the entropy of one thing necessary to decrease the
entropy of another) that distinguishes fuels, which are consumed,
from raw materials, which are not.

Consider gasoline. We could take the waste
products of an internal combustion engine and put them back together.
But we would have to use at least as much power as we got out of the
gasoline by burning it. Since the point of having gasoline is as a
source of power, the process would be utterly pointless.

Four major sources of usable energy are available.
There is accumulated organic fuel--coal, oil, natural gas--now the
main source of commercial energy. There is solar power. That,
converted into electricity by hydroelectric plants, is a secondary
source of commercial power; converted into food by plants, solar
power is the main source of the energy burned by the human body.
There is fissionable material for reactors. There is deuterium,
which, in principle, can be used in fusion reactors.

Organic fuels remain important because they are
slightly cheaper than nuclear sources and because most of the cheap
locations for Hydroelectric power are already being utilized. If the
cost of using fuel to produce power goes up, either because of
charges imposed for pollution or because of increased scarcity, the
other power .sources can substitute at only slightly higher
costs.

World reserves of organic fuels correspond to
about 400 times the present annual consumption; even if we assume a
steady rise in rate of power consumption, that should last well into
the next century. Reserves of fissionables are several times as
large; reserves of deuterium for fusion power are still
larger.

The heat absorbed by the earth from the sun is
about 15,000 times greater than present power consumption; almost all
of it is, in principle, usable power. If power consumption grows at 4
percent a year, in about 250 years we will require all of it.

This is not the ultimate limit of our power
consumption. About one half of one-billionth of the sun's light falls
on earth; about half of that is absorbed. If we get desperate enough
to start building solar mirrors to trap all that wasted power, we can
continue a 4 percent annual growth rate for another 560 years. In a
little over 800 years, we will have to stop increasing world power
consumption or else find some source other than the sun.

In summary, there seems no reason to believe that
a policy of laissez-faire in population--combined with a policy of
imposing the cost of pollution on polluters--wil1 threaten the
standard of living of the next few generations of Americans.

So far most of my discussion has been limited to
the effect in the United States of events in the United States. Many
people argue that demographic trends outside U.S. borders pose a
threat, not only to the populations directly concerned, but to the
U.S. as well. They argue that we must set an example by controlling
our population, or that we must take strong actions to encourage and
subsidize population controls abroad, or both.

The "good example" argument makes little sense. We
are already setting a good example--whatever that may be worth;
United States population is growing at less than half the average
rate for the world. It is hard to see why lowering the U.S. rate from
I percent to zero would make much difference to countries that have
not been able to get their rate below 2 percent. Besides, if they
want an example of a highly successful society with a stable
population, they can look at Japan; how many examples do they
need?

The whole argument sounds like something cribbed
from Lewis Carroll. We have to cure a population problem we don't
have in order to get other countries to cure population problems they
do have. It is like a father taking his son's medicine to prove it
does not hurt. Whatever the moral relationship of the United States
to the rest of the world, it is not paternal.

There remains the alternative of bribing other
countries to keep down their populations. Is this alternative in our
interest? Is unrestrained population growth abroad a threat to the
United Stares?

Most arguments for this thesis start with the idea
that unrestrained population growth will have catastrophic effects on
the welfare of foreign populations. I am not certain that that
assertion is true, but will assume it for the moment.

We are rich. They are poor, numerous, and hungry.
They will be driven to attack us and take what we have and they need.
The impoverished masses of the earth will rise in their righteous
wrath to seize their food from the fat exploiters. Etc.

It makes a fine morality play, but poor
geopolitics. Abyssinia did not, after all, invade Italy. India's
plans for adding England to an Indian empire have not gone very far.
The Manchurian campaigns of World War II occurred in poor China, not
(relatively) rich Japan.

It is doubtless true that poor people covet their
neighbor's land. So do rich people. The question is, can they get
away with taking it? If so, they are likely to try, however rich they
are and however poor their victims--as the colonial powers proved
repeatedly in the last century. If not, they won't. Under conditions
of modern warfare, military strength depends mainly on wealth and
technology: hordes of starving peasants are not very effective.
Especially if the projected victim is the United States; it's hard to
swim the Pacific.

If wee are really worried about future attack, and
if population increase really leads to poverty, the United States
should be sabotaging birth control programs abroad, instead of
subsidizing them.

A similar argument can be made in economic instead
of military terms. The United States consumes large amounts of raw
materials, some of which are imported. If the rest of the world has a
huge, hungry population, it will consume the resources itself, and we
will be left out in the cold.

Here again the argument breaks down on the
assumption that the population is not only large but poor. Starving
Indians cannot compete with rich Americans in bidding for the mineral
resources of Africa; they are too near subsistence to be able to
offer any high price. Even starving Africans cannot compete for the
resources of Africa. If we have things to offer (food and fertilizer,
say) that are much more valuable to them than the minerals required
by a developed, technological society, they will sell us those
minerals. That is precisely what has been happening for the past 25
years, in independent black African countries just as in colonies.
The developed countries of Europe and America outbid the Africans in
the competition for African resources. The individual African, or
individual African government, would rather sell to a foreigner at a
high price than to a neighbor at a low one.

If population increase causes poverty, and if the
major effect on the United States of other countries' development is-
to bid away resources from us, it is in our interest to encourage
population growth and discourage development.

Let me state the relation of premise and
conclusion differently. Assume that a shortage of fixed resources is
a very major problem for a world (or country) with a large
population. That assumption implies that a large population will
cause poverty. It also implies that the United States should worry
seriously, in the future, about foreign nations bidding natural
resources away from us. If that assumption is right, it is in our
interest to encourage population, and poverty, in the underdeveloped
world.

In my opinion, the premises of these ugly
arguments are false.

For the same reasons discussed earlier in this
section, when dealing with the United States, I do not think that
fixed resources are a major problem. If I am right, the development
of underdeveloped countries will not be catastrophically affected by
what happens to their populations. Further, the development of those
countries will not injure us; the prices of raw materials will rise
enough to encourage recycling and more efficient use, but that rise
will be only a small cost to us. Since the development of other
countries greatly increases the opportunities for profitable trade,
the net effect would almost certainly benefit us.

One final remark. I suspect most writers who argue
that world poverty poses a threat to us, and should be prevented for
that reason of arguing dishonestly. They really believe that world
poverty is bad because it is bad for people to be poor--even
foreigners. With that position I agree. They put the argument in
terms of American self-interest in the hope of thereby prying money
out of the taxpayers.

This is a dangerous game to play. If we accept the
premise on which their argument is based (which premise is, I think,
false), it follows that America's self-interest is to keep the rest
of the world poor. If forced to choose, the American taxpayers may
prove less altruistic--and more practical--than their intellectual
leaders.

CONCLUSION

It is coming to be widely believed that the
results of allowing parents freely to decide how many children they
have must, in the long run, be catastrophic under any tolerable
social institutions. It is already widely believed that the results
of allowing parents freely to decide how many children they have, in
the United States, have already proved catastrophic, or soon will. I
can find no justification in economic theory for the first belief. I
can find no justification in either economic theory or the present
circumstances of this country for the second.

12. AIvin M. Weinberg and R. Philip Hammond,
"Limits to the use of energy." In Is There
an Optimum Level of Population? edited by
S. Fred Singer. New York. McGraw-Hill Book Company, Inc., 1971, pp.
42-56.

[1]Unless the commons is such
that its bearing capacity disappears only as the flock approaches
infinite size, it can be shown that it is impossible for rational
farmers to graze it to extinction. The argument goes as
follows

let N be the number af animals on the
commons.

Let V(N) be the average net profit per animal when
the commons is bearing a herd of N.

The optimal value of N is that at which NV(N) is
maximal; that is d/dN [NV(N)]= V(N)+NXdV(N)/dN=0

For a farmer owning a faction f of the total herd,
the benefit of increasing the herd by adding an additional animal to
his flock is V(N). The cost is --fN dV/dN; this is the reduction of
the value of the rest of his flock. He thus continues to increase his
herd as long as

V(N) +fNdV/dN>0 ( I )

Consider the figure. If V(N) goes to 0 for some
finite No
and if equation I is satisfied up to No then by integrating equation
1 from No- to No we get:

Area of the (approximate) triangle

ABC> V(No--) fN (2)

But, since V(N) is decreasing, the area of tbe
triangle is less then the area of the square ABX DC. But that area is
V(No--)x. Thus however small fN may be, one can always take small
enough to make inequality 2 impossible.

N here is treated as a continuous variable. For
integral N, the argument holds a fortiori